UK Government focuses in of Digital Pound CBDC

The EU has set out the world’s first comprehensive set of rules for regulating crypto markets in its MiCA regulation. They are due to receive final approval in the coming weeks and come into effect in 2024.

UK Government focuses in of Digital Pound CBDC

In this context, the UK government has finally broken its silence around the Digital Pound CBDC.

Getting the design of a Digital Pound right is a bigger priority than a rapid launch, Britain’s Financial Services Minister Andrew Griffith said.

“The consultation is going to say this is an if and not a when. We are not fully into the inevitability of doing this,” Griffith told the UK parliament’s Treasury Select Committee.

A Digital Pound raises many public policy issues.

“We have got to get them right. I would rather be right than be first. “It will be a long lead-time activity.”

However, the UK was committed to becoming a world crypto hub, Griffith said. And the government was “a long way down the road… to establish a regime for the wholesale use, for payment purposes, of stablecoins”.

Stablecoins are designed to have a predictable value linked to traditional currencies or assets such as gold.

The currency, for use by households and businesses, would sit alongside cash and bank deposits, rather than replacing them.

Public Consultation

A public consultation on the attributes of a Digital Pound would be launched in coming weeks, Griffith told the Treasury Select Committee.

“I want to see us establish a regime, and this is within the FSMB [Financial Services and Markets Bill, currently being debated in Parliament], for the wholesale use for payment purposes of stablecoins,” he said.

Central banks around the world are developing or exploring digital currencies as previously reported by Payments Cards & Mobile.

China, for example, is a front-runner in this global race, and is in the process of testing a digital yuan in major cities including Beijing, Shanghai and Shenzhen.

The European Central Bank in July 2021 took a first step towards launching a digital version of the euro, kicking off a 24-month investigation phase to be followed by three years of implementation.

“It is right to look to seek to embrace potentially disruptive technologies, particularly when we have such a strong FinTech and financial sector,” said Griffith.

He wanted to allow the opportunity for this “potentially disruptive game-changing technology that can challenge but also turbocharge all of those [financial] industries”.

The first case use of a Digital Pound would probably be in the settlement of wholesale financial transactions, he added.

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